Say, have you all had a chance to catch the Charles Schwab ad that's running lately? After I watched it a couple of times, I started to feel--in the words of Joe Biden--like I'd been "played for a sucker."
Guy in a suit saunters into frame with a 80's-sized boombox on his shoulder and says:
Let’s talk about that 401(k) you picked up back in the 80s. Like a lot of things, the market has changed, and your plans probably have too. [guy in suit shuts off the boombox] At Charles Schwab, we’ll give you personalized recommendations on how to reinvest that old 401(k). So talk to Chuck and bring your old 401(k) into the 21st century.
Guy pulls an MP-3 player out of his pocket, plugs in the earphones, smirks, and then saunters off.
So the guy with the big, anachronistic boom box on his shoulder (kind of like you, you big, anachronistic investor) is urging you to reminisce about that 401(k) you "picked up", erm--rather, invested your hard earned money in back during the 80’s and 90's thinking—indeed you were told you very likely could—expect a very nice return on your investment if you followed the sage advice of the Wall Street pros. Invest! This was considered the smartest thing to do with your money, right? Don’t just plop it in a savings account like your grandmother did! Might as well put it under your mattress if you're gonna put it in your local bank! Wall Street, baby! That's where you should be putting your money.
And so we did--and continued to, for the next 20 years, give or take. Things looked pretty good through the 90's and into the next decade. The economy grew—and we continued to listen to its siren’s call: Never try to time the market! Don’t pull out….just put more in…It may go down, but it will go back up…keep investing in that 401(k)...
Okay, we all know what eventually happened, and it was painful. Well, they never guaranteed anything did they? Course not. You didn't go and pull your money out now, did you?
So, here we are today in 2012, and now the very same financial houses that urged us to keep investing all those years, profited heavily from it--and continue to now that we've bailed a lot of them out of a disaster of their own making--have devised a brand new marketing ploy:
You know that quaint 401K you picked up--sorry, invested in--thinking it would grow and perform the way it was sold to you back then? Well, let us tell you man—that is about as outdated a way of thinking as this big boom box on my shoulder here. You are so old school! You are so out of touch with the way the world works today! You are stuck with a 401-K that is showing negative or at best, pathetic growth, because you are hanging on to an anacronistic and silly device from back in the day. You are just not with it, man! And you know who can help?
Charles Schwab.